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UPDATE 1-Bond, equity gains boost Swiss central bank 2012 profit
March 7, 2013 / 10:29 AM / 5 years ago

UPDATE 1-Bond, equity gains boost Swiss central bank 2012 profit

* Income, price gains from bonds 8.4 bln Sfr, 6.7 bln from equities

* Gains of 1.4 bln Sfr on gold holdings

* To distribute 1 bln Sfr to cantons and federal government (Adds detail)

ZURICH, March 7 (Reuters) - Gains on a range of investments contributed to 2012 profits at the Swiss National Bank as it swelled its holdings of foreign bonds and shares after intervening heavily to keep a lid on the franc.

The central bank said on Thursday that net profit was 6 billion Swiss francs ($6.34 billion), confirming preliminary figures it reported in January.

Some 4.5 billion came from the huge foreign currency positions it has accumulated to defend the 1.20 per euro ceiling it imposed on the franc in September 2011, and 1.4 billion from its gold holdings as a bullion price rally continued.

It said income and price gains on interest-bearing paper and instruments came in at 8.4 billion compared to 6.7 billion from equity securities.

They together more than compensated for exchange rate-related losses of 10.6 billion francs, incurred on the appreciation of the franc against the yen and dollar.

The SNB capped a soaring franc against the euro in 2011 to help stave off recession and deflation and was forced to intervene heavily last year as the euro zone crisis flared, boosting its currency reserves by almost 175 billion francs to 432 billion francs.

The SNB’s foreign exchange holdings, which amount to almost three-quarters of annual Swiss output, have gradually fallen in recent months as tension in the euro zone lessened, standing at 427.7 billion at the end of February.

The SNB held 82 percent of its foreign currency in government bonds at the end of 2012 and 12 percent in equities, with 49 percent of the portfolio held in euro-denominated assets, 28 percent in U.S. dollars and 8 percent in yen.

It said the value of its bond portfolio rose 86 billion francs to 289 billion in 2012, while the value of its equity holdings more than doubled to 52 billion francs.

SNB Chairman Thomas Jordan told a news conference the central bank was constantly re-evaluating the composition of its portfolio, but declined to give further details on the SNB’s equity holdings.

The central bank said a fund of toxic assets from UBS , the country’s largest bank which had to be bailed out in 2008, had also contributed 0.9 billion to profits.

The SNB reiterated it would distribute 1 billion francs in dividends to the cantons and the federal government. Switzerland’s 26 cantons, or states, are the central bank’s biggest shareholders. ($1 = 0.9465 Swiss francs) (Reporting by Emma Thomasson; Editing by John Stonestreet)

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